Yuvraj, the man of the tournament in the 2011 World Cup, had last played for India in November 2011 before being diagnosed with a rare germ cell cancer.
The World Twenty20 Championship event will be played in Sri Lanka from September 18 to October 7.
Yuvraj will also be playing two T20 games against New Zealand at home on September 8 and 11.
Officially, Yuvraj's fitness report was tabled at the selection meeting and the selectors picked him only after an all-clear on this front.
After his treatment, Yuvraj has been working out at the National Cricket Academy in Bangalore and has also played a few practice matches recently. NCA sources said he has done enough to dispel any doubts about whether he has adequate stamina.
Indian Squad for World T20
Mahendra Singh Dhoni, Virender Sehwag, Gautam Gambhir, Virat Kohli, Rohit Sharma, Suresh Raina, Ravichandran Ashwin, Ashok Dinda, Manoj Tiwary, Zaheer Khan, Yuvraj Singh, Irfan Pathan, Piyush Chawla, Harbhajan Singh, L Balaji.